Infographic: How Real Estate Investing Works

If you’re looking for an easy and reliable way to accelerate your retirement, then you really ought to consider becoming a landlord. Right now, more than 30% of US homes are currently rented and demand for quality rental properties is only predicted to grow in the coming months. Since the market is still saturated with foreclosures, there’s never been a better time for new investors to add one of these steady and dependable sources of income to their portfolio.

Although it sounds complicated, converting a foreclosure into a rental property is much simpler than it seems. Anyone, even novice investors, can go from “looking” to “leasing” in three months or less. You just need to get familiar with the process. Check out our new infographic to see exactly how it’s done.

Don’t forget that a personal residence and a rental property are two different things. The lender is looking at your earning capacity to pay the mortgage of a personal residence; they look to the potential income of a rental property to pay that mortgage on which there is no Personal Mortgage Insurance to offset the loss if they foreclose. Rentals have vacancies that can reduce the yearly income below a safe margin of operation–hence the higher interest.

Steve,
I’m not interested in being a landlord when I retire in a couple but I am interested in passive investing. Can you describe the particulars of this avenue for those of us who may just want to collect dividends from investing in real estate.

A Passive Investor provides part of the down payment funds needed to secure a multi-family unit. This amount is usually around 30% of the mortgage. The mortgage will include usual costs such as appraisal and other fees, such as prepaid insurance and prepaid taxes . It may also provide the funding for necessary restoration. In return the passive investor receives part of the net profits from operation of the apartment unit in quarterly increments. These may a distribution of part or all of your initial capital investment also. The passive investor has little or no say in the purchase and operation of the apartment, depending upon the initial agreement between the lead investor, who finds, purchases, rehabs and manages the complex and the passive investors who have contributed their funds toward the purchase.

Lee, then you’d lend to investors on their deals, getting a mortgage to secure your loan. Many folks use their self directed IRA, moved to companies like Equity Trust (A SD-IRA custodian, about a dozen others) and then lend money.

That’s called holding the note. Income without the toilets and renters. Your local real estate investors association in your city can hook you up with reputable investors.

Renting out the property to who need it will be regular production for you who have property in a great location. In addition to the form of profits from the rental house production, the status of the ownership of the property is still remain yours. This is one of the widely used means for those who want to defend their property while increasing the resale value of this asset in the future.

Renting involves finding a property, getting it in rent ready condition and marketing it for rent. The rental real estate investing strategy offers a number of profit opportunities. Cash flow is created when the monthly rental income exceeds the mortgage and other expenses. Long term wealth is created through appreciation of the property, the tenants paying down the mortgage, and tax advantages.

Imagine having 10 houses paid in full and rented for $1,000 a month for a monthly cash flow of $10,000. If the houses were only worth $100K each, you would have $1 million in assets plus a $10K per month cash flow before expenses. This financial position can be fairly easily accomplished in your own timeframe. Some people buy one or two houses per year and others buy a number of houses right away. Oak Lawn il real estate agents

This is an amazing infographic outlining what it takes to invest in rental property. I agree that the first step anyone should take before jumping in as an investor is to educate themselves about the entire process. This will lessen the stress and make for a more realistic approach to purchasing, staging, and leasing the property. I would love to recommend that people start with their bank before even looking at properties. There is no sense finding the perfect rental, only to find out you don’t qualify for the financing. This kind of disappointment can make for hard times, and is completely avoidable. Thanks again for sharing!

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